Travis Hill, chairman of the U.S. Federal Deposit Insurance Corporation (FDIC), said a July law would not grant the agency the authority to guarantee stablecoin deposits. Speaking at the ABA Washington Summit, Hill noted that under the GENIUS Act, the FDIC would not permit government-backed deposits to be guaranteed once fully implemented. Stablecoin issuers would be prohibited from representing that the digital assets were FDIC insured, and pass-through insurance would be stopped by third parties. If a payment stablecoin arrangement qualified for pass-through insurance, this would mean that if a bank holding the issuer’s reserves in a deposit account failed, the FDIC would insure the deposit account based on the interests of the stablecoin holders, rather than insuring the account as a corporate deposit account eligible for only $250,000 of insurance, said Hill.
The GENIUS Act, passed by Congress and signed into law by US President Donald Trump in July, established a US regulatory framework for payment stablecoins. The law will be fully implemented 18 months after it was signed or 120 days after related regulations are finalized in agencies like the FDIC and Treasury Department. While the FDIC may not be insuring stablecoin holders’ deposits, issuers will be expected to fully back the dollar-pegged coins. Stablecoin yield debate continues in market structure bill.
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